Th e C o n s i ste n t Tr a d e r ’ s

Blueprint

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How do I start trading?

The first steps of trading, should begin well before you actually place a trade. The most common mistake
among those interested in trading is - jumping in too fast. The journey to successfully trading begins well
before you execute the trade.

Trading can be thought of as an art. In order to paint a portrait, first you must trace the outlines, set up the
model, prepare your brushes and have a patient temperament to meticulously complete the painting
process. Trading requires you to prepare and learn to control your temperament. So before asking how
do I start trading, ask yourself what do I need to do before I start trading?

What is the most important aspect of trading?

Make money by taking control of your mindset. Trading requires a patient, calm and objective mentality.
Practice taking control of your emotions before you jump into trading. Breathing, taking note of your
triggers, and finding ways to stay level headed can help you achieve this.

These techniques, along with other calming methods, will help you maintain emotional control while you
trade. Anger, fear, greed, jealousy, and doubt, cloud your ability to successfully and objectively trade. The
most important aspect of trading is to trade without emotion. When they say 90% of traders fail, it’s
because they let emotions overpower their commitment to a trading plan. Trading requires both a
financial investment and a personal investment.

Creating Capital to Start Investing

To make money in the markets, you will need to invest, not only your personal time and energy, but also
your capital. This does not mean you need to be a millionaire, but it does mean that you need a plan to

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have money to invest when you’re ready to buy your first stock.

If you have placed money aside that you are able to invest then you are one step closer to starting! If not,

you need not worry! It is never too late to start setting aside money to invest. However in order to create

the capital you will need to trade, you will need to change or modify your financial habits.

You need to ask yourself - What can I do to save more money? In what ways can I spend less? In what

ways can I make more? What sacrifices am I willing to make to set aside money? You must be willing to

accept short-term pain. Successful trading is not a game of instant gratification. Understand that in

order to have long-term success, you must be willing to make short term sacrifices. Accepting short term

sacrifices can sound hard and discouraging, but remember most people don’t want to make the

sacrifices needed, so if you do, you’ll be ahead of the curve! If trading was easy, everyone would be a

millionaire. Those who put in the time and sacrifice, are those who reap the rewards.

You need to ask yourself - What can I do to save

more money? In what ways can I spend less? In

what ways can I make more? What sacrifices am I

willing to make to set aside money?

Start thinking of ways in which you can start building your trading capital so when you’re ready, you have

your starter account ready to grow!

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How much money do I need to start trading?

There is no set amount of money that you need to start trading! Make sure that the amount you start with

is something you are comfortable with. Although there is no set amount, you can potentially have a higher

return percentage with a higher level of investment. You should never trade with money you can’t afford

to lose because trading takes time to master; there will be wins and losses.

What are the three types of trading?

There are three types of trading - day trading, swing trading and long-term investing. Each requires

different skill sets and can fulfill different trading goals.

Day trading is when you enter and exit a trade within the same day. It requires extreme discipline, high

level emotional control, and interrupted time each morning. For day trading stocks, there is something

called the Pattern Day Trader rule in which you cannot make more than 3 intra-day trades (where you

buy and sell within the same day) in any 5 day period unless you have $25K+ in your trading account.

Swing trading is a great way for beginners to start trading. It requires less of a time commitment and less

emotional control than day trading. That is not to say that it requires none - all successful swing traders

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are able to put in their time, effort, and most importantly maintain an ob ective mindset when they trade.

Swing traders enter and exit traders within a couple days to a couple of weeks. They buy and sell based

on swings or pivot points in the charts. Additionally the account requirements for swing trading are much

lower than for day trading. R

esearching more about your trading platform can tell you what account

requirements there are.

Long term inves ting refers to buying and holding for years and years. It is exactly what it is named. This

requires less time and less emotional control than day trading - especially since you largely ignore the

day to day and month to month noise and volatility of the markets. Y
our goal is to make profit from your

trading over 5 -10 + years.

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How can I fit trading into my schedule?

Establish what parts of your schedule are fixed and what parts are flexible. After determining your

schedule set aside as much time as you can each day to both learn and trade. The stock market is open

from 9:30AM ET to 4PM ET on weekdays. Any trades you execute, will be done within this time frame.

There are different levels of time commitment for different types of trading:

Day trading requires at least 3 hours of uninterrupted time at the start of the trading day. The most

action for day traders is from 9:30 AM ET - 12:30 PM ET

Swing trading, which we recommend for beginners, requires around 1-2 hours during the day. This

can be after work, this can be in the mornings. Most of the time spent is monitoring current stocks

you own and looking for new opportunities. If you’re not able to trade during market hours, you can set

up your trades off-hours to automatically execute through your trading platform when the market is

open

Long term investing requires a minimal amount of time as you are looking for stocks that will perform

well over the long term and are not focused on the day-to-day movements in the stock. You may

spend 20-30 minutes a day monitoring your portfolio performance as well as looking for

opportunities to add to it.

After establishing your trading schedule, be sure to be disciplined about sticking to it. Additionally you

should spend extra time outside of trading hours - or on weekends reviewing your trades and learning

more.

TRADING TYPES BY TIME COMMITMENT

RECOMMENDED

Long Term

Day Trading Swing Trading

Investing

3 hours/day 1-2 hours/day

20-30 mins/day

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The Market

The market is the space in which individuals and institutions buy and sell financial instruments like

stocks, bonds, commodities, derivatives, and mutual funds. When first founded, the markets were

physical spaces where individuals would verbally buy and sell. Today this can all happen electronically!

Allowing you to trade wherever you may be.

The most commonly heard of financial instruments are stocks, but there are other instruments that can

be traded such as futures, options and bonds. Although you do not have to trade stocks, we highly

recommend that beginners focus on trading stocks. Focusing in on trading stocks can give you the

opportunity to greatly, greatly reap the rewards of the market.

What is a Stock?

A stock is a unit of ownership in a company. The stock is what you buy and it is exchanged in units called

shares. Essentially when you buy stocks, you are buying shares, which is a small piece of that company.

The price of a stock will fluctuate, and after buying or selling a stock, you make profits or losses based on

those fluctuations. Owning stocks of a company gives you the opportunity to personally make profit off of

that company’s success.

How do I know what stocks to pick?

There are thousands and thousands of stock opportunities available at your fingertips. It can be

extremely difficult to find what stocks are best suited for you to trade. We recommend using a stock

scanner known as “Finviz” to screen for good stocks to pick. (https://finviz.com/). The key is to focus on

what you want from your portfolio, what industries interest you, and what companies are strong and

reliable. Start with a short list of stocks to monitor, so you don’t overwhelm yourself.

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Should I start by trading penny stocks?

While share prices are much cheaper for penny stocks - stocks between ~$0-5 - they are more risky to

trade because the financial institutions and big players don’t trade them. This means penny stocks can

be manipulated and move extremely quickly. If you don’t pay attention, your account could be wiped out!

They also have more potential to be traded fraudulently. This is not a safe space for you to get started in

the markets.

Diversifying Your Stock Portfolio

As stated earlier, it is best to start with a small list of stocks, but as you grow your account, you will want to

diversify your portfolio. You don’t want the success or failure of your account to ride on one stock. You

want to have your capital in different spaces that are independent of each other to mitigate your risk. As

your account grows be sure not to place all your eggs in one basket!

What is Technical Analysis? Why should I use it?

Technical Analysis uses past market data and the

current price movement, to predict the direction of the

stock. Price action charts are laid out so the X axis

represents time and the Y axis represents price.

Through technical analysis you can analyze the

patterns within the charts to predict price movements

and make higher probability successful trades.

Analyzing the charts provides you with the most

important information you need to know.

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The reason we use technical analysis is because it is in real time. In today’s electronic world, information

is quick to spread, and this information is traded on as soon as people find it.

A common phrase ‘Buy the rumor, sell the news’ is meant for those who follow the news to decide what to

do, and usually find themselves too late to the party. If you wait to trade on the news, you are usually

entering a trade too late. Everyone will already know the information that you're trading on, and you are

putting yourself at a disadvantage by not being ahead of the curve.

Technical Analysis predominantly relies on candlestick charts and analyzing trendlines. A candlestick

represents the fluctuations in price on any given time frame. For example if you were looking at a daily

chart, each candle would represent a day. A green candle shows an increase in price from the open and

close of the markets, while a red candle represents a decrease in price.

Looking at the charts, you can see trends. There are uptrends in which the charts appear to move in a

general upwards direction, or downtrends in which the charts move in a general downward direction, or

sideways trends in which the charts move in a general horizontal fashion. Identifying these trends can

help to predict future price movements.

Uptrend

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Downtrend

Sideways Trend

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W hy not trade earnings reports ?

Earnings reports are where public companies discuss their financial results to the public. Earnings

reports are publically available knowledge, however institutions and big players typically know about a

company’s earnings before the report is launched so they will buy and sell shares beforehand.

Earnings reports are not guarantees of future earnings - therefore a stock with a good earnings report, but

meek future projections, may go down! This leaves those who traded the report, stuck with a loss - left to

hope and pray that the stock will eventually climb back up.
Downtrend

Isn’t trading just like gambling ?

Trading is only gambling if you don’t have a plan or strategy. There is a difference between a reliable trader

and a gambler. Unlike gamblers, traders are professional risk managers who trade with only high

probability technical set-ups.

Traders who make consistent profits from technical analysis understand that you should never gamble

in the market. Although many people put their money in the stock market hoping to get lucky, for every

lucky trade these people make, they make 1000 unlucky trades.

In order to make steady profit off of your trades, you need to understand trading is all about consistency -

not about being lucky. Successful trades won by luck cannot be a reliable source of extra income.

Successful trades that are backed by knowledge, expertise, and patience can provide you with a reliable

source of extra income!

W hy should I trade Stocks and not Options ?

For a beginner, Options is like gambling, it’s much more complex than trading stocks yet a lot of platforms

like Robinhood and others are making it readily available to new traders. Options are not as simple as

buying and selling shares, they are contracts for control of those shares with expirations. If you are wrong

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about a trade, you will lose, but you will also lose if the market moves sideways and the contract reaches

expiration. There are more things that need to go right for you to be successful in Options so focus on

learning and trading stocks, because you can’t master options without mastering and understanding

how stocks move first.

Taking Advantage of the Stock Market

W hy do stock prices move up and down ?

Traders and large institutions determine price movement when they buy and sell their shares. Price is

affected by the buyers and sellers because they move demand and supply levels.

For example let’s compare a stock to a burrito. If 10 people want to buy one burrito, that burrito could be

sold for a high price because there is so much demand for that burrito. On the other hand if 10 people

already have burritos, and there are extra burritos, a burrito would be sold for a low price because there is

an extra supply of burritos.

Similarly the price of a stock increases when demand for that stock is high, and price decreases when

the demand for that stock is low. Buyers push prices up by increasing demand, while sellers push prices

down by increasing supply.

Therefore traders and large institutions determine price movement when they buy and sell their shares.

However since large institutions hold the majority of shares, they are able to heavily impact price

movement within the markets.

You may have heard of the phrase “buy low and sell high.” This phrase refers to a trading strategy known

as “going long” in which the trader buys stocks at a low price, then sells them at a higher price - profiting

off of the difference between when they bought and sold the stock.

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To identify good places to buy and sell, it is important to look at historical data. Taking a look at charts

documenting historical price movement can help you see zones in which the price previously rose and

fell. Finding these “money zones” takes lots of practice and chart analysis - but once you’ve found them

they pay off.

To identify good places to buy and sell, it is important to look at historical data. Taking a look at charts

documenting historical price movement can help you see zones in which the price previously rose and

fell. Finding these “money zones” takes lots of practice and chart analysis - but once you’ve found them

they pay off.

Only after you’ve found a strong company - that is both reliable and financially stable - should you

consider buying shares. Remember that with unstable companies, sometimes the lows can go even

lower!

What is an IPO?

IPO stands for “Initial Public Offering.” This refers to the conversion of a private company into a publicly

traded company. An IPO is the launch where shares of a company are officially opened to trade on the

stock exchange.

An IPO marks the start of a company’s journey in the financial markets, and can seem very enticing to

investors. However buying shares of a company that has recently become public can be very dangerous.

This is because those companies have the capability to move quickly in either direction. Furthermore

traders cannot look to previous historical data to predict price movement. For every successful IPO,

there’s hundreds that are not.

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Account Set Up

Which Trading Platform should I use?

A Trading Platform is an electronic service where trade orders are placed. Individuals place orders, and

the platform is responsible for physically completing the order.

You may have heard of a few trading platforms - Robinhood, ETrade, Charles Schwab to name a few.

Robinhood has gained recent attention as a primarily app based trading platform. It catches new traders

because of its user friendliness, however it is very limited in its capabilities. You are actually unable to fully

utilize technical analysis or draw on charts to identify “money zones” via Robinhood.

We recommend using “TradeStation” or TD Ameritrade’s “Think Or Swim.” We recommend using these

two platforms because they give you the ability to draw on your charts and fully leverage all the

capabilities of technical analysis. Both platforms provide reliable customer support and great

customizations and features to fit the needs of beginners and veterans alike. TradeStation is compatible

with Windows OS, while Think Or Swim is compatible with both Mac and Windows OS.

The U nder Appreciated V alue of Practice

It seems like everyone is keen to practice before performing in every other area of life besides the stock

market. We practice instruments before recitals, we practice presentations before we present, we

practice interviewing before attending a real interview - but everyone seems to jump into trading before

they’ve practiced.

Trading has real world consequences, and those that jump into trading unprepared often suffer. Take a

step back, and be patient. Trading is about consistent gains, and consistency can not be achieved

without the experience or the practice to back it up.

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With TradeStation and Think Or Swim, you can practice trading with what is called paper money.

Papermoney trading is essentially a simulation in which you trade with fake money! It is the perfect way

to learn without facing any real financial consequences!

Whis is R isk Tolerance?

Risk Tolerance is essentially how much you are willing to risk losing on any given trade you make. Having

a set plan to manage your risk is extremely important because that is what separates the successful

traders from the unsuccessful traders.

A good rule of thumb is to have a 2:1 risk reward ratio. This means that if you're aiming to make $20 or

$30 per share on a trade, your risk would be $10 per share. The risk:reward ratio should be based on the

technicals and not arbitrary numbers. Don’t just make up numbers for risk and reward. You want to set

your risk at the point where the chart would tell you that you are wrong about the trade. Furthermore you

want to ensure that the chart shows a good possibility of reaching at least double the risk point.

What can I expect to make in the market?

A better way to look at this question is to ask yourself what should I not expect to make in the market?

Do not expect to get rich quick. Consistent trading is about just that - consistency. It is not about huge

sudden gains, but rather about consistent, reliable, long-term profits.

Technical analysis shows you how to make the highest probability trades. This is not to say you will win

every trade! No trade is guaranteed to go your way because no one can predict the future. This is to say

that overall, despite the losses you may suffer short-term, the goal is to make steady profits. You must be

able to sustain small losses, both financially through risk management and personally by controlling your

emotions, in order to make larger profits.

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Do not expect to get rich quick. Consistent trading is

about just that - consistency. It is not about huge

sudden gains, but rather about consistent, reliable,

long-term profits.

Your profits are amongst other factors, based on your account size, the stocks you trade, how much time

you put into your learning and how you are able to control your emotions - there is no one percentage

that everyone should expect to make since we all move at a different pace. The biggest trap is

EXPECTING consistent returns from the market. The market doesn’t owe you anything so don’t fall into

the trap of expecting certain things that will cloud your emotional judgement while trading.

Now that you have your starter kit…

...the trading world is waiting for you! The stock market provides a shiny new opportunity for you to make

money wherever you are. With practice, patience, and knowledge you too can share the glistening

rewards of the markets. Hold onto your feeling of motivation and hope, and rely on this throughout your

trading journey.

The best time to plant a tree was 20 years ago, the second best time is now. Now that you have this

starter kit, you have the answers you need to get started in your growth.

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